1 HUGE Reason Traders Lose Money (and a simple solution to prevent it)

Do you know what? I think one of the biggest reasons is why traders stress out, freak out, and end up blowing their accounts. It's actually not because they don't have a good strategy, although sometimes, or actually very often that is a problem. But even if you've got a good strategy, this one problem can cause you all sorts of grief and make you lose money. Even if you've got a good strategy, not knowing what to expect from that strategy is an absolute killer. Because if you don't know that there's a 15%, 20% loss lurking out there somewhere that might have your name on it and you and you don't trade accordingly, then when that big loss comes along, it could wipe you out, even though it's perfectly normal for the strategy. I think one of the biggest mistakes that traders make is not fully understanding the risks and the profile of the systems that they're trading. We've got to back test our systems thoroughly so that we know all possible types of trades that we could get as a result of those systems. For example, let's have a look at this strategy called Q Bounce, which I'll be teaching at my upcoming Market Mastery Boot Camp event. If you want to attend Market Mastery Bootcamp, get this system for free and learn a ton of other great trading lessons. Click the link in the description and register. Now, the performance of Q Balance is actually pretty great. It's got a compound annual return of over 20%, the drawdown is around 30%, and it's a single instrument system. It just trades one ETF and it's only invested in the market about 12 to 13% of the time. So as you can see in backtesting, the performance of the system is pretty good all the way back to 2010 when the TQQ started trading. But if you just took this at face value, looked at the equity curve and started trading it, you could be in for a little bit of a shock, because not all the trades are exactly uniformly distributed. Let me show you what I mean. If we look at the distribution of trades from this strategy, you can see what we've got is a large number of relatively small wins, small winning trades, and we've got a small number of relatively larger losing trades. Now, if you didn't dig into the trade profile and understand exactly what range of possible outcomes you could get from the strategy, when that 15% loss comes along, you could be in for a rude shock. And if you position size too aggressively or you use too much leverage, that could really get you into trouble. But if you trade this system as intended with no leverage and modest position sizing, then it works really well in conjunction with a portfolio of systems in your trading account. So the number one lesson in order for you to survive long term as a trader is don't go in blind. You can't afford to fly blind. As a trader, you've got to back test your strategy to make sure it's profitable. But then dig beneath the surface, underneath the high level metrics to make sure that you understand exactly what could happen. What are the range of possible individual trade outcomes? What are the numbers of winners in a row, losers in a row? How deep can the drawdown be? All of those extra detailed metrics to make sure you truly understand exactly what could happen following that strategy. Now, if you want to learn the fastest way to go from launch to mastery of Systematic Trading and get the fully disclosed rules of this strategy, and learn a whole bunch of other great trading tips and strategies, click the link in the description below and register for Market Mastery Bootcamp. My name is Adrian Reed and I'm the founder of Enlightened Stock Trading. Coming up real soon, I'll be teaching Market Mastery Bootcamp, which is a free two day live event where I'll be showing you the shortest path from launch to mastery of Systematic trading. So click the link in the description below, register for Market Mastery Bootcamp and let me show you the fastest way to become a consistent, confident stock trader. Bye for now.